Bitstrade, an online platform that dubs itself an open source digital banking and cryptocurrency investment solutions platform has been issued with a cease-and-desist order by the New Jersey Bureau of Securities.
Same Story, Different Platform
According to the New Jersey Division of Consumer Affairs, the Attorney General Gurbir S. Grewal and the Division of Consumer Affairs has announced that the Bureau of Securities issued an emergency cease-and-desist order on February 9, 2018, to Bitstrade.
The order alleges that the company has been operating in violation of the State’s Uniform Securities Law by collecting people’s money in the form of bitcoin and promising them ten percent daily accrued returns.
The Bureau’s action is in line with the decision of federal lawmakers who have discussed ways of formulating a proper regulatory framework for cryptocurrencies.
The Attorney General Grewal has said that the Bureau is only trying to “protect investors as they navigate the uncharted and largely unregulated domain of cryptocurrency-related investments.”
Grewal added that “We want to make sure that investors tempted to cash in on the cryptocurrency rage aren’t being lured into sending funds to an anonymous internet entity without knowing where the funds are going or how they’ll be used.”
Director of the Division of Consumer affairs, Sharon M. Joyce opined that since the Bitstrade platform is based on cryptocurrency, if and when the bubble bursts investors won’t be able to recoup their funds in any way. In her words:
“What makes Bitstrade’s fraudulent offer potentially more harmful for unsophisticated investors is that cryptocurrency is virtually anonymous, so there is no recourse for investors to recoup their losses.”
As written on their website, Bitstrade claims it provides Private Banking services to the masses.
“We are working as an investment pool, collecting multiple lower value investments and grouping them into one single HUGE investment, using those funds to trade on the stocks market, and generate outstanding returns. We then share back a portion of our revenue to our customers.”
Similar to the now-defunct BitConnect, which the Texas Securities Board clamped down in January 2018, Bitstrade promises investors fixed returns as high as ten percent that “accrue daily” and investors could begin earning profits with as low as $10 and a maximum of $100K.
On its homepage, the top ten investors are listed along with their recent withdrawals. While the company has almost a thousand satisfied users, their activity in the state of New Jersey is very opaque. Apart from selling unregistered securities, there are also some discrepancies in Bitstrade’s office addresses.
Bitstrade claims to be located in Redland, California and Scottsdale, Arizona. However, the Bureau has hinted that the California address listed on Bitstrade’s website is nonexistent. The Arizona address listed is the headquarters of an unrelated, publicly-traded internet domain registrar and web hosting firm.
Chief of the Bureau of Securities, Christopher W. Gerold, said that:
“Bitstrade is a prime example of a company seeking to capitalize on the cryptocurrency craze. Regulators, including the Bureau, are actively responding to fraudulent crypto-cloaked securities offerings.”
At the time of filing this report, the firm is yet to respond to the Bureau’s allegations. It is likely that the company could go offline in the coming days just like BitConnect and others. Like this, investors are advised to desist from adding any more funds to the platform.